Daily Market Outlook, December 12, 2022 

Investors Pare Risk Ahead of This Week's Inflation Data & Central Bank Decisions

Asian equity markets have started the week on the back foot, as investors pare risk positions ahead of tomorrow's US headline inflation data coupled with major central bank announcements due Wednesday and Thursday. Friday's firmer PPI data underpinned US Yields with the 10yr trading back above the 3.50% level, the move in US Yields also helped support the greenback, however, foreign exchange markets are predominantly range-bound ahead of the headline event risk this week. 

This morning's UK GDP data showed some signs of improvement, the economy rebounded by 0.5% in October, pipping market expectations of 0.4% for the month, the increase represents an uptick on September's 0.6% decline, driven by the additional bank holiday following the Queen's funeral. The improvement in UK GDP comes ahead of tomorrow's employment report, followed by domestic CPI data Wednesday, then Thursday sees the final Bank of England meeting for the year, market watchers anticipate another modest increase in headline inflation to print 10.9%, this should see the BoE raise rates again on Thursday by another 50bps to 3.5%. Looking to tomorrow, US inflation data will be scrutinised as to the effectiveness of the Fed's most aggressive hiking cycle since the 1980's, this data comes a day ahead of Wednesday's FOMC meeting. In the Eurozone, the ECB will also update its policy on Thursday, with markets poised for the European central bank to slow the pace of rate hikes from 75bps to 50bps raise this week.

Markets-wise, expect somewhat of a holding pattern to develop today as investors await the deluge of inflation and central bank data before repositioning into year-end, with many investors hoping that once this week's data is digested, the eagerly anticipated year-end rally in equity markets may have a chance to get underway.

Overnight Headlines

  • Congress Faces Deadline For Keeping Government Funded

  • BoE Divisions on Rates Set To Deepen With UK Stagflation Outlook

  • UK Power Surges To Record As Sub-Zero Chill Sends Demand Surging

  • UK Home Asking Prices Are Falling At Sharpest Pace In Four Years

  • UK Lenders See 23% Slide In Mortgages For Home-Buyers In 2023

  • China’s Top Medical Adviser Says Omicron’s Risks Same As Flu

  • China's Healthcare System Put To The Test As Covid Curbs Fade

  • Japan PPI Inflation Sticks To Near 41-Year High In November

  • BoJ’s Takata Says Not Time To End Yield Curve Control

  • Kishida Aide Says Amamiya, Nakaso Among Candidates For BoJ Chief

  • Investors Withdraw Record Levels Of Coins From Crypto Exchanges

  • Uneasy Traders Ramp Up Bets On Europe Bond Selloff

  • Oil Rebounds As Key Pipeline Remains Shut And China Eases Curbs

  • Turkey’s Oil Tanker Backlog Is Starting To Clear

  • Asian Shares Fall, Dollar Firms Ahead Of Central Bank Rate Hikes

  • World’s Top Money Managers See Global Stocks Recovering In 2023

FX Options Expiring 10am New York Cut

  • EUR/USD: 1.0380-90 (1.06BLN), 1.0420-25 (637M)

  • 1.0500-10 (1.6BLN), 1.0550 (381M), 1.0565 (270M)

  • 1.0600-10 (598M)

  • USD/JPY: 135.00 (610M), 136.00-05 (730M), 138.00 (911M)

  • USD/CHF: 0.9500 (208M)

  • GBP/USD: 1.2070 (298M), 1.2150 (446M). 

  • EUR/GBP: 0.8750 (405M)

Technical & Trade Views

SP500 Bias: Bullish Above Bearish Below 3900

  • Primary support is 3900

  • Primary upside objective is 4120

  • Failure at 3880 opens a test of 3850

  • 20 Day VWAP bearish, 5 Day VWAP bearish

EURUSD Bias: Bullish Above Bearish below 1.05

  • Primary support is 1.05

  • Primary upside objective is 1.0620

  • Failure at 1.0440 opens a test of 1.0350

  • 20 Day VWAP bullish, 5 Day VWAP bullish

GBPUSD Bias: Bullish Above Bearish below 1.22

  • Primary support is 1.22

  • Primary upside objective 1.24

  • Failure at 1.2080 opens a test of 1.2030

  • 20 Day VWAP bullish, 5 Day VWAP bullish

USDJPY Bias: Bullish above Bearish Below 137.70

  • Primary resistance is 137.70

  • Primary downside objective is 132

  • Acceptance above 138 opens a test of 139.30

  • 20 Day VWAP bearish, 5 Day VWAP bullish

AUDUSD Bias: Bullish Above Bearish below .6640

  • Primary support is .6640

  • Primary upside objective is .6900

  • Failure at .6600 opens a test of .6550

  • 20 Day VWAP bullish, 5 Day VWAP bearish

BTCUSD Bias: Intraday Bullish Above Bearish below 16500

  • Intraday 16500 is primary support

  • Primary upside objective is 18000

  • Failure at 16400 opens a test of 16000

  • 20 Day VWAP bearish, 5 Day VWAP bullish